I used to think index funds were boring until I saw the average hedge fund returns over 10 years

I read a report from the S&P Dow Jones Indices that compared hedge fund performance to the S&P 500 over the last decade. Turns out something like 85% of active hedge funds didn't beat the simple index after fees. That stat from a 2023 SPIVA report made me realize I was overcomplicating things. Has anyone else found a similar stat that shifted how you invest?

2 comments

2 Comments

ben4022d ago

The SPIVA report you mentioned actually shows something even crazier when you dig into the survivorship bias... about 30% of hedge funds just straight up closed or stopped reporting numbers over that same ten years. So the 85% failure rate is actually being generous because the dead funds got wiped out of the averages entirely. That made me rethink chasing any "smart money" manager who claims they have an edge. Now I just look for total market index funds with expense ratios under 0.05% and call it a day.

joel_mason222d ago

That survivorship bias stat is brutal, just buy the whole market.